Australia’s energy operator wants emergency powers to switch off rooftop solar. What does it mean for households?

If you're one of the 4 million Australian householders or business owners with solar panels on your roof, you may have been greeted with a rude shock at the start of this week.

News emerged that the body responsible for keeping the lights on in Australia's main electricity grids wanted powers in every state to ensure rooftop solar could be turned down — or switched off — in extreme circumstances.

The Australian Energy Market Operator said an "emergency backstop mechanism" was urgently needed everywhere and by next year, no less.

It's a radical notion and not one that's likely to be immediately welcomed by too many rooftop solar owners.

But what exactly is involved in this proposal?

And why on earth is anyone suggesting the powers are needed at all?

The answers to these questions, and more, speak as much as anything to the profound changes underway in Australia's electricity system and the role of householders within it.

What is an emergency backstop and why do we need one?

As the name suggests, the backstop power would be for emergencies.

More precisely, those circumstances would arise when there is so much rooftop solar in the system that it's threatening to overload the grid.

It's hard to appreciate just how much rooftop solar can be generated at times in Australia.

A couple of decades ago, there was practically none anywhere in the country.

Even when state governments lavished subsidy schemes on solar and people started to take up the technology with gusto, the amount of power that could be collectively generated was tiny.

But fast forward to now and it's a very different story.

Across the entire national electricity market, which spans the eastern seaboard and South Australia and services about 10 million customers, excess solar power exported to the grid from household systems can meet more than half of demand at times.

And in South Australia, arguably the world's rooftop solar capital, that share periodically exceeds 100 per cent.

In other words, South Australia can meet all of its demand for electricity from rooftop solar at times. And what it can't use gets exported interstate.

But with all that solar comes risks for the grid.

Solar power doesn't help keep the grid stable during power losses. The grid needs inertia, which is like the momentum that keeps a car moving smoothly even when you take your foot off the accelerator.

Coal, gas, and hydro plants provide this inertia through their turbines, helping keep the grid steady and maintaining consistent power levels.

Rooftop solar can't do the same thing, and it's increasingly pushing those plants out of the system in the middle of the day when its output is greatest.

Conventional generators can turn down their output to accommodate solar, but only to a point. Eventually, their output becomes so low they have to switch off altogether.

And, for AEMO, that's a worry.

The agency fears the amount of conventional generation providing those security and stability services — and able to step in when the sun stops shining, for example — is falling to critically low levels.

Hence it says powers are needed to "reduce" some of that excess rooftop solar at certain times.

The powers already exist in South Australia, Western Australia, parts of Queensland and Victoria, but AEMO wants them extended everywhere.

How will the backstop work?

It's not entirely clear how emergency backstop powers will work, but AEMO says they are most likely to occur in spring — when the days grow longer and sunnier and solar output soars while demand for electricity remains relatively subdued thanks to milder temperatures.

In those conditions, the agency says the amount of rooftop solar in the system can become a risk if anything goes wrong, such as the unplanned loss of a coal-fired generator or transmission line.

And things always go wrong.

At such a time, AEMO would tell the relevant state or states as well as the network poles-and-wires companies there was a problem.

It would then be up to the states and the poles-and-wires companies to deal with the problem.

One of the levers at their disposal would be the backstop provisions, which would allow rooftop solar systems to be throttled back to stop sending excess energy to the grid, or switched off entirely.

On those occasions, Queensland poles-and-wires companies Ergon and Energex say, affected households can expect a few things.

A signal will be sent to their solar inverter, shutting down generation.

The affected household would then have to take their power from the grid, from which they'd be charged "as per your electricity tariff".

Once the emergency backstop has been removed, "a signal will be sent to the inverter which will return it to normal operation".

All up, according to Ergon and Energex, an emergency would last no more than 4 hours.

What's more, the firms said, "the chances of an 'emergency event' occurring is very low and it may only occur once per year or less".

Added to this, AEMO notes that even in South Australia, where the emergency backstop has been in place since 2020, "compliance rates were initially poor".

Many older, and even some new, solar installations do not have the ability to be remotely switched off.

Rectifying this, AEMO says, is likely to be a long and difficult task.

When might a backstop be triggered?

According to AEMO, the backstop would only ever be wheeled out when all other measures to keep the system on an even keel were "exhausted".

Broadly, those measures would include further lowering — where possible — the "minimum safe operating levels" of the big coal plants that act as bookends for the system.

Doing so would make more room for solar.

Similarly, AEMO says investments could be made in special pieces of kit known as synchronous condensers, which replicate the system strength functions of coal plants without producing any electricity.

Another option is to increase demand for electricity during the day, when solar energy is so abundant and cheap.

This could be done by developing industries that need a lot of power but not all the time.

Or it could be through electrification — getting our cars and our household appliances to soak up as much of that solar as possible.

Then there is storage — building more batteries and pumped hydro projects to stash the energy when it's flooding on the grid.

But even with all those options, AEMO says emergency backstop powers will still be needed as a "last resort".

It warned that without such powers, more draconian measures might be needed.

These could include increasing the voltage levels in parts of the poles-and-wires network to "deliberately" trip or curtail small-scale solar in some areas.

An even more dramatic step would be to "shed" or dump parts of the poles-and-wires network feeding big amounts of excess solar into the grid.

Who will wield the power?

On this question, there is some confusion.

Despite vociferously advocating for greater control of rooftop solar and, specifically, the emergency backstop capability, AEMO is at pains to point out it would not be pulling the trigger.

In response to the ABC's reporting of the topic this week, AEMO released a statement in which it said it "does not want to directly control people's rooftop solar".

More bluntly, the market operator stressed there was no "big red button" that allowed it to dump people's solar installations from the grid.

What we do know is that in areas where the backstop exits, households getting new or replacement solar panels will need to have a special type of inverter connecting their system to the grid.

The inverter will have to be capable of receiving a signal to turn off — or down — when required.

And, indeed, it is the poles-and-wires companies that would send the signal to that inverter.

But, according to Ergon and Energex, network firms like them would not be acting alone.

They would be acting "under the direction of AEMO" and "in alignment with" the state government.

Suffice to say, AEMO is ultimately the body responsible for keeping the lights on across the major electricity systems in Australia.

The agency monitors the balance between supply and demand for power and the stability of the grid.

None of this is likely to happen without AEMO first setting the parameters by which the backstop would be used.

How will it affect solar owners?

In all likelihood, the backstop power will have a minimal effect on solar households.

It may even have no effect at all.

Although rooftop solar is a growing force in Australia's electricity system, the circumstances in which it pushes the grid to the precipice are still rare.

What's more, they only last for a few hours at a time.

To deal with the challenge, AEMO has pointed out all the ways that excess supply can be turned into an asset rather than a liability for the system.

The politicians, regulators and energy experts want us all to use more power when the system is awash with cheap solar and less of it later in the day, when it isn't.

It's why so much effort is being put into installing smart meters on every home by 2030 and introducing surge prices that charge energy customers higher prices in the evening.

Chances are, Australia will learn to better capitalise on its solar riches, avoiding the need to take drastic steps like throttling rooftop solar.

Still, AEMO says the amount of extra solar getting added to the grid every year means the risks aren't going away.

Is it still worth getting solar?

The estimates vary, but rooftop solar generally tends to lower power costs.

A rule of thumb, according to industry players, is that a typical rooftop solar installation will cut electricity bills by about 30 per cent a year.

But how much rooftop solar might save a householder depends on how they use the power generated by the panels.

Generous feed-in-tariffs — the payments made to customers for the excess solar power they export to the grid — are increasingly a thing of the past.

Whereas once a householder might have received anything up to 60 cents per kilowatt-hour for their solar exports, they can now realistically expect something more like 5 cents.

For that reason, experts say it's now far more valuable to use the power generated by solar panels in your own home rather than sell it to the grid.

After all, buying power from the grid on a flat rate can easily exceed 30 cents a kilowatt-hour — or even double during the peak under surge pricing plans.

Using a kilowatt-hour of electricity generated by your solar panels, on the other hand, costs nothing once the up-front cost is paid.

The spread of emergency backstop powers to be used on rare occasions seems unlikely to change the basic equation in favour of solar.